New Delhi: In a major setback to YSR Congress party Chief Jaganmohan Reddy, who was arrested by the CBI for possessing disproportionate assets to his known sources of income, the Andhra Pradesh High Court on Wednesday rejected his bail plea.

Earlier, the court had reserved its order on Jagan’s bail petition till Wednesday.

Jagan, who was named as the key accused in the case, was arrested on May 27 and is under judicial remand at Chanchalguda jail here.

Justice Samudrala Govindarajulu had completed hearings on the petition on June 27 and had reserved the orders for on Wednesday.

The court was not convinced with the argument of noted advocate Ram Jetmalani, who was appearing for Jagan in the case, contended before the court that his client is innocent and he had nothing to hide in the case. Jethmalani also argued that Jagan's arrest by CBI was illegal.

Opposing the bail plea, Ashok Bhan, the counsel of CBI said the probe agency was a premier investigating agency and one could not find fault with the agency. CBI counsel made these arguments when Ram Jetmalani reportedly argued that Jagan's arrest by CBI was illegal.

The CBI counsel had argued that the case involved financial irregularities to the tune of Rs 43,000 crore and the agency is investigating the fund flow into Jagan's companies.

Bhan had contended that giving bail to the accused at this time may hamper investigation as the probe agency is yet to file some more charge sheets in the case.

On the other hand, Jethmalani had argued that Kadapa MP Jagan's arrest is politically motivated and there is no absolute evidence about his client being non-cooperative with CBI or the possibility of his tampering with the evidence.

Jagan is being "harassed by CBI at the behest of their political bosses," Jethmalani had alleged.

CBI, in its three charge sheets filed against him and others, has alleged that Jagan and his father, late Andhra Pradesh Chief Minister YSR Rajasekhara Reddy had hatched a conspiracy to defraud the government with the son influencing the father in doling out certain favours to various industries, which made investments of crores of rupees into Jagan's business as a quid-pro-quo arrangement.

Jagan's close aide and auditor Vijay Sai Reddy, who was arrested by CBI in the same case, was granted bail earlier by a local CBI Special Court.